Fundamental Precious Metals (2009-10-22)

<h3>The Dollar's Weakness Fuels Demand on Precious Metals</h3>

By IBT Staff Reporter On 10/22/09 AT 3:36 AM

The Dollar's Weakness Fuels Demand on Precious Metals

Precious metals rose slightly throughout yesterday's trading, due to noticeable demand in markets from numerous investors and speculators. Consequently, demand on the metals rose after the dollar's plummet and crude's surge above $80 per barrel, thereby encouraging traders to obtain metals. This surge was seen with silver the most, where we see speculators leading yesterday's trading.

Silver rose yesterday closing at $17.68 per ounce in NY, rising by 1.14%; whereas platinum inclined by 0.89% when it closed at $1360.00 per ounce; meanwhile, gold surged to $1065.60 per ounce, before slightly falling and closing at 1058.80 rising by 0.39%.

On the other hand, U.S. stock indices fell due by the end of the session; while commodity indices kept rising due to the effect of high energy prices; the S&P GSCI index closed with strong gains of 12.82; whereas the RJ/CRB COMMODITY index closed at 284.09, witnessing a surge of 5.96. This major incline that commodities witnessed took the index to its highest levels in over a year.

Commodity indices spike alongside crude as well, and the dollar’s slump was mainly behind demand heading to precious metals as a hedge against inflation, being a safe haven against the possibility of rising inflationary risks over the medium and long term. On the other hand, we see the glimpse of improvement within the global economy getting clearer, after company earnings pointed to a clear improvement in overall profit; forcing investors into commodity markets, where precious metals gained demand as well.

Today, some bearish correction for gold and silver was witnessed; where gold traded at 1057.10 slightly trading lower as of 2:29 EST; silver followed by declining to $17.58 per ounce; whereas platinum still maintains positive trading till this minute, trading at $1363.00 per ounce.

Precious metals could witness mixed trades today, where a downside correctional reverse is also expected throughout the coming short term period. Presently, traders are heading towards stock markets alongside numerous other commodities, which are providing lucrative returns and continue to rise surpassing precious metals. However, over the medium and long term, precious metals are still favored for further gains.